A Couple New Health Insurance Fees You'll Pay in 2014

You’ve probably heard that premiums are going to rise, perhaps drastically, beginning in 2014 when the bulk of the “Affordable Care Act” (what some call “Obamacare”) takes effect.
There are a lot of reasons for the increases. One of them is that there will be new taxes and fees levied on health insurance carriers. And, remember, businesses of any kind (including, but not limited to, health insurance companies), pass taxes and fees along to their paying customers as part of the cost of doing business.
Here are two such provisions that one major health insurance company (from whom we’re borrowing this explanation) estimates will add about 5.7% to your health insurance premium next year. That’s before anything else – increases in healthcare, mandated coverage, changes to underwriting and “age-banding” and anything else – takes place.
So buckle up.
Insurer Fee (Health Insurance Industry Tax or Premium Tax)
Description: An annual, permanent fee on health insurers based on market share of net premiums written.

  • No fee on covered entities for the first $25 million of net premiums.
  • For greater than $25 million up to $50 million, 50 percent will be taken into account, and 100% of net premiums written in excess of $50 million will be subject to the fee.
  • Doesn’t apply to self-insured plans, state, federal or other governmental entities.
  • Additional provisions for tax-exempt insurance providers (only 50 percent of net premiums taken into account when calculating the fee).

Fees: Anticipated to be about 2.3% of premium the first year.
Federally Facilitated Exchange (FFE) Fees
Description: A monthly fee issuers must pay to support the operation of the FFE.
Fees (proposed): The monthly user fee rate is aligned with rates charged by State-Based Exchanges at 3.5% of premium; this amount may be amended by HHS in future final rules.
Our intent here is not to be political – honestly it’s not. But we do want to begin preparing our clients (and prospective clients) for what to expect as we move towards the new health insurance environment we’ll likely enter next year.